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Fed's Evans: If US economy to slow down, that would call for some type of monetary policy response

Chicago’s Fed's Evans continues to make remarks, now stating that if something happened that caused the US economy to slow down, that would call for some type of monetary policy response.

Fresh comments:

  • Says he sees inflation as anchored, perhaps too low, and does not anticipate inflation causing monetary policy to need to tighten.
  • Says he doesn't have a great assessment of the true level of "maximum employment," but rising employment is a good thing.

Prior comments: 

  • The US economy is in a very good place.
  • He expects u.s. job growth to decelerate over time.
  • He expects inflation to reach 1.9% this year, close to 2% goal.
  • He is very comfortable with the fed's rate cuts last year.
  • He is "pretty comfortable" with current stance of monetary policy.
  • Says the 'phase 1' US-China trade deal holds open possibility of stabilizing economic uncertainties.
  • Says interest rates are in the right place to support the economy.

FX implications

Markets are already pricing a near-zero chance of easing at the next Fed meeting on 29 January and were leaning towards there being no changes throughout 2020, although a cumulative shift from board members would be impactful. However, Chicago’s Charles Evans, who also supported easier monetary policy, is a non-voting member this year so comments are less impactful.

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